How Mortgage Forbearance Works Under Cares Act

Tag: mortgage

In a Media Release on April 3rd 2020 the Consumer Financial Protection Bureau released a video on How the mortgage forbearance works under the cares act.

Due to the Covid-19 Outbreak many mortgage lenders are offering Forbearance assistance. Forbearance means your mortgage lender or bank may be willing to pause or reduce mortgage payments for a limited period of time. It does not eliminate your payment or erase what you owe on your mortgage. With a mortgage forbearance missed or reduced payments must be repaid at a future date.

It is recommended that if you are able to make or keep up with your mortgage payments, do so. A forbearance only delays the payments to a future time when you’ll have to make them up on top of your normal mortgage payments.

Here is the video regarding How Mortgage Forbearance Works Under The Cares Act that was released by the Consumer Financial Protection Bureau or CFPB.

For information or questions regarding legal assistance for your home mortgage, mortgage mediation, mortgage modification or bankruptcy in Washington State including King, Snohomish and Pierce counties and the cities of Bellevue, Seattle, Everett, Tacoma, Olympia and Western Washington:

What If I’m a Year Behind in My Mortgage Payments?

You may be behind only two months in your mortgage payments or up to two years behind! Wherever you may find yourself on that scale, the question is, what do you do and what’s going to happen? First and foremost, let’s be clear that it is vitally important that you keep in good communication from the get-go or as soon as possible. The longer you avoid notices due to embarrassment or denial, the worse things can get.

Lenders are usually very willing to work with you UNTIL a Notice of Default is filed. Once one of these is filed, it is very hard to work with your lender as they are looking out to protect their interest. So, be sure to communicate early and often. Also, keep a clear record of every time you communicate with your lender: the day you called, the name of the person you talked to and what you talked about. This can only help you later down the road. Remember, lenders do not want to foreclose, so if you’re unable to fulfill your mortgage obligation, contact your lender immediately so they can give you options to help you.

Options may include:

–time to make up your payments. You may be granted something called forbearance, an agreement from the lenders to not take action against you while you work out a repayment plan that is affordable for you.

-forgiving a payment. The lender may grant you debt forgiveness, which means they may let you skip a payment or two if you can prove that you will be able to pay thereafter. However, this rarely happens.

–repayment plan. Sometimes you can spread the missed payments out over a longer-term. For example, if your mortgage is $900, you may pay $200 more a month until you’re caught up, temporarily making your payments $1100.

-change the terms of your loan. Maybe your interest rate can be adjusted or maybe your amortization period can be extended.

–refinance. You may be able to add the back payments to the balance of your loan if you have sufficient equity.

-partial claim. Some government loans have provisions that allow the borrower to apply for another loan to pay back the missed payments if they meet certain criteria.

The above are routes of action if a Notice of Default has not yet been filed. if one has been filed, your remaining options are to reinstate your loan, sell your home, consider a short sale or sign a deed in lieu of foreclosure.

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